Cryptocurrency is a booming industry with some cryptocurrency values reaching an all-time high in 2021. If you’re like many of the people who have looked into putting your money in cryptocurrency markets, you may have heard of Bitcoin (BTC).
Bitcoin has earned most of the media attention paid to cryptocurrencies because it has proved itself successful so far. However, there are other options aside from Bitcoin if you want to invest in this expanding sector.
If you’re new to investing in cryptocurrency, you may be wondering what these alternatives are and why they are worth consideration. This article will walk through what altcoins are and how they differ from Bitcoin. We hope that after reading this, you feel confident knowing your options when putting your money into cryptocurrencies.
Altcoins Open the Window to Significant Gains
Has this ever happened to you? You buy Bitcoin, and you hold on to it until the price goes up by 220%, but then Bitcoin drops by 80%. At that point, you’re disappointed because you’re down 40% from your initial purchase price.
However, if instead of investing in Bitcoin alone, while also having invested in other altcoins (such as Ethereum or Ripple), not only would the return on investment have been greater, but the potential for price appreciation would’ve been even higher.
When it comes down to it, investing in altcoins offers five key benefits. These include a better return on investment, greater potential for price appreciation, the prospect of a price spike, and finally, the chance of earning passive income.
Altcoins Offer a Viable Solution to Real-World Problems
One of the reasons to invest in altcoins is that they can offer a viable solution to real-world problems. Bitcoin and Ethereum are the coins most people know about, but there are 18,465 cryptocurrencies in existence as of March 2022. Most altcoins were created to solve problems that Bitcoin or other coins couldn’t solve. This includes offering features like privacy, solving a problem in a specific industry, or being simpler to use.
There are altcoins focused on working as anonymous payments systems, like Monero and ZCash. There are also altcoins focused on providing digital identity solutions for organizations and individuals, such as Civic and SelfKey (KEY).
It’s not just about anonymity though, there are plenty of coins that try to improve upon the original design of Bitcoin or Ethereum. It’s achieved by using different consensus algorithms (like EOS) or improving scalability (like Loom Network), or even by creating entirely new blockchains from scratch (like ICON).
Altcoins Are Highly Volatile and Extremely Affordable to Buy
Altcoins are highly volatile and extremely affordable to buy. Like stocks, the prices can go down or up at any time. However, it’s more likely that your altcoin will experience a big change in price than a stock would. If you’re willing to take some risk, this means that you have the potential of making bigger returns on your investments.
Let’s say that you only have $60 to invest and that you want to buy as much cryptocurrency as possible with it. With stocks, there isn’t an option for buying tiny fractions of shares using small amounts of money. You’d be lucky to find a company with a share price under $100 and even then, you’d be restricted from buying entire shares of those companies (or if you did buy them, it’d be only one or two).
The Total Number of Altcoins Is Limited
Another compelling reason to invest in altcoins is that the number of these alternative coins is limited. Right now there are more than 18,000 altcoins and only 21 million Bitcoins. But remember, this number will keep decreasing over time because new altcoins are being created by the minute, which is a good thing.
If you wish, you can invest in all altcoins. As long as one of these coins does well or continues to grow in value, your investment will continue to grow with it.
A widely held misconception about investing in cryptocurrencies is that Bitcoin has been around for a long time and is, therefore, more “stable” than other cryptocurrencies. In fact, since its inception Bitcoin has been erratic and volatile.
The truth is that any cryptocurrency can quickly become worthless if it’s no longer supported by the community or if there’s no use case for it anymore. Since new cryptocurrencies come into existence every day, it’s extremely unlikely that any single currency will ever be lost or obsolete due to a lack of support from its community.
Altcoin Investing Can Be Profitable Even During Bear Markets
Investing in altcoins at a time when Bitcoin is declining in value can be profitable if you’re smart about it. In a bear market, Bitcoin is often used as collateral for trading against altcoins. Bearish traders will try to buy low and sell high, so if you want to take advantage of this type of trading you should buy an altcoin when its price is low and the value of BTC is at its highest.
When it comes to using your head in investing, it’s really important to know the right time to sell—or at least set stop-loss order. When Bitcoin recovers from a bear market and enters a bull market, the value of altcoins also tends to go up. If you sold your investment before it went up (at around $1 per coin) then you missed out on more profit than if you waited until that coin was worth $3 (and now your profit is tripled).
Conclusion
These are just a few reasons why you should invest in altcoins. You will have an advantage over other people because you can buy altcoins and potentially sell them for a higher price later on. However, it’s important to remember that there are no guarantees when investing in any asset, including cryptocurrencies.
Just like with any type of investment, altcoins can be volatile. As such, you need to make sure that you don’t invest more than what you can afford to lose. Otherwise, it may become difficult for you financially if the value goes down and doesn’t recover by the time when you want to sell your coins.